Judge: Yolanda Orozco, Case: 22STCV32548, Date: 2023-02-06 Tentative Ruling
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Case Number: 22STCV32548 Hearing Date: February 6, 2023 Dept: 31
MOTION TO EXPUNGE LIS PENDENS
TENTATIVE RULING
Defendants Morris and Fidora Taxon’s Motion to Expunge Notice of Lis Pendens is GRANTED.
Background
On October 04, 2022, Plaintiff Bay Area Development Co. filed a Complaint against Defendants Secured Income Fund-II LLC; PLM Lender Services, Inc., Sami Mickhael, and Does 1- 30 for:
1) Breach of Implied Terms of Written Forbearance Agreement;
2) Breach of Implied Covenant of Good Faith and Fair Dealing;
3) Interference with Contract;
4) Quiet Title; and
5) Declaratory Relief.
On January 10, 2023, Defendants Morris Taxon and Fidora Taxon filed a Motion to Expunge Notice of Lis Pendens.
On January 23, 2023, Plaintiff Bay Area Development Co. filed a Notice of Lis Pendens.
Defendants Morris and Fidora Taxon filed a reply on January 30, 2023.
Legal Standard
“[A] lis pendens is recorded by someone asserting a real property claim, to give notice that a lawsuit has been filed which may, if that person prevails, affect title to or possession of the real property described in the notice.” (Federal Deposit Ins. Corp. v. Charlton (1993) 17 Cal.App.4th 1066, 1069, citing Code Civ. Pro. §§ 405.2, 405.4, 405.20.)
Under Code Civ. Proc. § 405.30, at any time after a notice of pendency of action has been recorded, any party with an interest in the real property may apply to the Court to expunge the notice. A lis pendens may be expunged either under Code Civ. Proc. § 405.31 if the pleadings do not contain a real property claim or under Code Civ. Proc. § 405.32 if the Court finds that the party claiming the lis pendens has not established by a preponderance of the evidence the probable validity of the real property claim.
Under Code Civ. Proc. § 405.30, the party claiming the lis pendens has the burden of proof of showing either that the pleadings contain a real property claim or that the probable validity of the real property claim can be established by a preponderance of the evidence.
Request for Judicial Notice
A court may take judicial notice of a recorded deed. (Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 194, 147 Cal.Rptr.3d 41.) The Court may take judicial notice of records of any court of record of the United States. (Evid. Code, § 452(d)(2).) However, the court may only judicially notice the existence of the record, not that its contents are the truth. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565.)
Defendants request Judicial Notice of the following:
EXHIBIT “1”: Deed of Trust recorded against the Property as Document Number 04- 2636316 in the Los Angeles County Recorder’s Office on October 14, 2004, securing a loan in the original principal sum of $975,000, with the lender as Washington Mutual Bank, FA, and the borrowers as Leslie Klein and Erika Klein, husband and wife and Kenneth Klein, a married man, as his sole and separate property.
EXHIBIT “2”: Notice of Default and Election to Sell Under Deed of Trust recorded against the Property on January 11, 2022, as Document Number 20220039153 in the Los Angeles County Recorder’s Office (the “NOD”), related to the second trust deed on the Property in favor of Secured Income Fund-II, LLC (“SIF”).
EXHIBIT “3”: Notice of Trustee’s Sale recorded against the Property on April 15, 2022, as Document Number 22020418290 in the Los Angeles County Recorder’s Office (the “NOS”), related to the second trust deed on the Property in favor of SIF.
EXHIBIT “4”: Trustee’s Deed Upon Sale recorded against the Property on August 16, 2022 as document number 20220820284 in favor of Sami Mikhael in the Los Angeles County Recorder’s Office (the “Mikhael Trustee’s Deed”).
EXHIBIT “5”: Notice of Rescission of the Trustee’s Deed in favor of Sami Mikhael recorded against the Property on September 22, 2022 as document number 20220926602 in the Los Angeles County Recorder’s Office (the “Notice of Rescission”).
EXHIBIT “6”: Trustee’s Deed Upon Sale in favor of the Taxons recorded against the Property on September 23, 2022 as document number 20220931475 in the Los Angeles County Recorder’s Office (“Taxon Trustee’s Deed”).
EXHIBIT “7”: Notice of Default recorded against the Property on December 1, 2022 as document number 20221123672 in the Los Angeles County Recorder’s Office, related to the first trust deed on the Property, and showing an outstanding amount of arrears as of November 28, 2022 as $120,384.57.
EXHIBIT “8”: Voluntary Petition for Bankruptcy filed by Bay Area Development on September 14, 2022 (United States Bankruptcy Court, Central District of California Case Number 2:22-bk-15031-SK, the “Bankruptcy Case.”).
EXHIBIT “9”: Bay Area Development’s Bankruptcy Schedules/Declaration Under Penalty of Perjury for Non-Individual Debtors filed September 28, 2022 in the Bankruptcy Case (Docket 18).
EXHIBIT “10”: Bay Area Development’s Amended Bankruptcy Schedules filed October 18, 2022 in the Bankruptcy Case (Docket 25).
Defendants’ request for judicial notice is GRANTED.
Evidentiary Objections
Plaintiff filed evidentiary objections to the Declaration of Morris Taxon file in support of this Motion.*
Objections Nos. 2, 5, 8, 9, and 10 are SUSTAINED.
Objections Nos. 1, 4 , 6, 7, 12, and 13 are OVERRULED.
*No objection labeled #3 was provided.
Defendants submitted evidentiary objections to evidence offered by Plaintiff in opposition to this Motion.
The following objections are SUSTAINED:
Declaration of Jeffrey A. Slott
· Page 8: 11-14. ¶ 3
· Page 8: 15-23. ¶ 4
Declaration of Leslie Klein
· Page 10: 7-16. ¶ 2
· Page 10: 17-20. ¶ 3
· Page 10: 21-23. ¶ 4
· Page 11: 1-7. ¶ 6
Declaration of Sheri Bienstock
· Page 12: 11-21. ¶ 3
· Page 12: 22-27. ¶ 4
· Page 12-13: 28-3. ¶ 5
· Page 13: 4-10. ¶ 6
· Page 13: 13-16. ¶ 8
· Page 13: 17-20. ¶ 9
The following objections are OVERRULED:
Declaration of Jeffrey A. Slott
· Page 8: 8-10. ¶ 2
· Page 8-9: 24-3. ¶ 5
Declaration of Sheri Bienstock
· Page 13: 11-12. ¶ 7
Discussion
Defendants Morris and Fidora Taxon move to expunge the Notice of Lis Pendens filed on January 23, 2023. Defendants assert that Plaintiff cannot prove by a preponderance of the evidence the probable validity of their real property claim for quiet title. (See Code. Civ. Proc., § 405.32.) First, Defendants argue that they are bona fide purchasers entitled to a conclusive presumption that the Trustee’s Sale was valid as to them. (See Moeller v. Lien (1994) 25 Cal. App. 4th 822, 831-832 [The purchaser at a foreclosure sale takes title by a trustee's deed. If the trustee's deed recites that all statutory notice requirements and procedures required by law for the conduct of the foreclosure have been satisfied, a rebuttable presumption arises that the sale has been conducted regularly and properly; this presumption is conclusive as to a bona fide purchaser. (Civ. Code, § 2924).”].) Plaintiff fails to present evidence that Defendants are not bona fide purchasers or that the Trustee Sale was improper. Plaintiff also fails to present evidence that the August 04, 2022 Trustee’s Sale was improper due to the Defendants’ actions. More importantly, Plaintiff fails to rebut evidence that Plaintiff’s inability to comply with the terms of the unsigned Addendum to Forbearance Agreement, attached as Exhibit 9 to the Complaint, was due to Plaintiff's actions. (See Compl. ¶¶ 16-18; Slott Decl. ¶ 5; Opp at 5:9-19.)
Under the Forbearance Agreement, Plaintiff was required to place $100,00.00 in escrow to postpone the Trustee’s Sale but Plaintiff fails to offer any evidence that it complied with this requirement by the August 02, 2022 deadline. (Compl. Ex. 9; Slott Decl. ¶ 5.) Moreover, even if Plaintiff can prove that it complied with the requirement, Plaintiff has not presented evidence that Defendants engaged in any wrongdoing regarding the Forbearance Agreement or that Defendants are not bona fide purchasers. Defendants also point out that Plaintiff has failed to prove it can make full tender to set aside the Trustee’s Sale. (See Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 526.)
Plaintiff’s assertion that Defendants obtained the property at below market price fails to consider that Defendant’s purchased the property at the Trustee’s Sale subject to a first deed of trust, that remains on the Property and is currently in foreclosure. (Taxon Decl. ¶ 12, Ex. G, RJN Ex. 1.) The $930,000.00 Defendants paid was also in excess of the $838,035.99 unpaid debt on the foreclosed second deed of trust. (Taxon Decl. Ex. D; RJN Ex. 6.) Therefore, the fact that Defendants paid a below-market price on the second deed of trust, does not mean Defendants are not bona fide purchasers.
“By expressly distinguishing the concepts of pleading and evidence in” section 405.38 “the statute makes clear that factual merit is also necessary to the maintenance of a lis pendens.” (Palmer v. Zaklama (2003) 109 Cal.App.4th 1367, 1377–1378.) Here, Plaintiff fails to explain how an evidentiary hearing prior to the hearing of this motion, will fix the decencies in Plaintiff’s evidence and overcome the presumption that Defendants are bona fide purchasers and that the Trustee’s Sale was valid.
“The party opposing a motion to expunge a lis pendens has the burden to show that a real property claim has been alleged and has probable validity based upon a preponderance of the evidence.” (Nunn v. JPMorgan Chase Bank, N.A. (2021) 64 Cal.App.5th 346, 363 citing Code Civ. Proc., §§ 405.32, 405.30.) Here, Plaintiff has failed to meet its burden and the Court is mandated to grant the Motion.
The Motion is GRANTED.
Conclusion
Defendants Morris and Fidora Taxon’s Motion to Expunge Notice of Lis Pendens is GRANTED. Defendants are entitled to recover their attorneys' fees.
Moving party to give notice.